With health care costs charting a chaotic and unpredictable path for more than a decade now, employers have shielded themselves from increases in premium by covering less and less of the total. Meanwhile, workers have adjusted either by postponing major health decisions, or foregoing insurance for some health needs, such as dental care, preferring to pay as they go — or stop going, as the case may be.
But some analysts are hopeful that, as the cost of insurance increases slows, more Coloradans will be covered by plans that meet their needs without causing them financial heartache.
“We know that there is great price sensitivity in purchasing insurance; this slowing of the health insurance premium spiral will mean more coverage for people in our state, meaning that Coloradans will be able to get the care they need, when they need it,” said Denise (Dede) dePercin, executive director of the Colorado Consumer Health Initiative.
According to the latest Lockton Employer Benefits Survey, 46% of employers are providing fully-insured plans — a significant decrease from a year earlier (58%), and the lowest it has been since 2003.
The cost of employer-provided health insurance is expected to rise 7.4 percent in Colorado next year. That’s down from 9.4 percent in 2012, and 14.4 percent in 2011. The 2013 increase in Colorado is much closer to the national average of 7 percent.
With the cost of a family health insurance plan at $16,000 in 2012, it’s no wonder more employers are moving to self-funded plans and away from full insurance from traditional sources.
With these self-funded plans, employers pay the first few thousand dollars of an employee’s health needs from company funds, then purchase catastrophic or stop-loss insurance for major illnesses.
Self-funded plans are particularly popular with companies with relatively young and healthy workers. Although the self-funded plans can be tailored to fit specific types of workers, the plans come with less oversight from national reform mandates or state insurance commissions.
For their part, employees are putting off elective surgeries on shoulders or knees to cope with higher deductibles. That move, analysts said, is keeping overall health spending down.
Lockton researchers found that 75 percent of employers indicated they would pass on some percentage of next year’s premium increase to their employees in the form of higher premiums and reduced benefits. This may result in more employees waiving medical coverage due to costs and a perceived lower value of the benefit.
Lockton’s wide-ranging report surveys 647 Colorado companies – from small mom-and-pop businesses to employers with several thousand employees.
Although the rate of increase is slowing, the report finds that almost 93 percent of employers cite cost increases as their top concern. Compliance with federal health care reform was the second greatest concern, even while acknowledging their understanding of the law is limited.
de Percin credits health care reform for the decline in premium increases.
“We had 11 years of double-digit increase in Colorado — health insurance premiums were rising four times as fast as wages. Then, last year, as the cost containment provisions of Obamacare took effect, the trend in Colorado dropped below 10% and then to 7.4% this year,” said de Percin.
“Trends like wiser use of the health care because of efforts such as accountable-care organizations, shared decision-making, and better-informed patients, or self-funding, have existed all along. So they can’t account for the dramatic drop in trend. It’s clear evidence that the provisions of the Affordable Care Act are bending the cost curve — pretty dramatically,” she said.
Still, 4 percent of employers responding to the Lockton Survey said they will drop health care coverage in 2014 when the Affordable Care Act is fully enacted, although only 59 percent said they were somewhat familiar with the insurance exchanges mandated by the reform and which are expected to help keep health care insurance inflation under control.
Meanwhile, even though the rate of increase in premium costs is slowing, it is still rising.
“It’s still a lot – we’re not jumping up and down,” said Donna Marshal of the Colorado Business Group on Health, a coalition of health care buyers.
Some companies with self-funded plans, on the other hand, are seeing significant savings.
Broomfield-based Vail Resorts, for example, said its self-funded plan rose only 4 percent this year, low enough to give its 4,500 employees a one-week paycheck holiday, returning health premiums.
Vail gives employees a $750 health spending account. If workers spend that account, employees then must pay deductibles and co-pays for additional or more extensive treatments. Company officials say 70 percent of employees still had money in their account after 11 months of the first year of the plan.
While the current trend in health insurance costs is a positive one, for the 1.5 million Coloradans who are uninsured or underinsured the change can’t come soon enough.
According to the Colorado Commission for the Medically Underserved, “When compared to those without health insurance, people with health insurance are physically, mentally, and financially healthier. Uninsured individuals are more often diagnosed at a later disease stage and receive less treatment for their medical conditions compared to people with health insurance.”